G.R. No. 127624. November 18, 2003.*FIRST DIVISION.

BPI LEASING CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS, COURT OF TAX
APPEAL, AND COMMISSIONER OF INTERNAL REVENUE, respondents.

Actions; Pleadings and Practice; Attorneys; Certificate of Non-Forum Shopping; Corporation Law; While
the certificate of non-forum shopping may be signed, for and on behalf of a corporation, by a specifically
authorized lawyer who has personal knowledge of the facts required to be dis-

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* FIRST DIVISION.

VOL. 416, NOVEMBER 18, 2003

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BPI Leasing Corporation vs. Court of Appeals

closed in such document, it does not mean that any lawyer, acting on behalf of the corporation he is
representing, may routinely sign a certification of non-forum shopping—the lawyer must be “specifically
authorized” in order to validly sign the certification.—As to the first issue, the Court agrees with
respondents’ contention that the petition should be dismissed outright for failure to comply with
Supreme Court Circular 28-91, now incorporated as Section 2 of Rule 42 of the Rules of Court. The
records plainly show, and this has not been denied by BLC, that the certification was executed by
counsel who has not been shown to have specific authority to sign the same for BLC. In BA Savings Bank
v. Sia, it was held that the certificate of non-forum shopping may be signed, for and on behalf of a
corporation, by a specifically authorized lawyer who has personal knowledge of the facts required to be
disclosed in such document. This ruling, however, does not mean that any lawyer, acting on behalf of
the corporation he is representing, may routinely sign a certification of non-forum shopping. The Court
emphasizes that the lawyer must be “specifically authorized” in order validly to sign the certification.

Same; Same; Same; Same; Same; Since powers of corporations are exercised through their board of
directors and/or duly authorized officers and agents, physical acts, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by corporate bylaws or by specific
acts of the board of directors; Being counsel of record does not vest upon a lawyer the authority to
execute the certification on behalf of his client.—Corporations have no powers except those expressly
conferred upon them by the Corporation Code and those that are implied by or are incidental to its
existence. These powers are exercised through their board of directors and/or duly authorized officers
and agents. Hence, physical acts, like the signing of documents, can be performed only by natural
persons duly authorized for the purpose by corporate bylaws or by specific act of the board of directors.
The records are bereft of the authority of BLC’s counsel to institute the present petition and to sign the
certification of non-forum shopping. While said counsel may be the counsel of record for BLC, the
representation does not vest upon him the authority to execute the certification on behalf of his client.
There must be a resolution issued by the board of directors that specifically authorizes him to institute
the petition and execute the certification, for it is only then that his actions can be legally binding upon
BLC.

Same; Same; Same; Same; Same; Substantial Compliance Argument; The view in Dimagiba v. Montalvo,
Jr., 202 SCRA 461 (1991), to the effect that a lawyer who assumes responsibility for a client’s cause has
the duty to know the entire history of the case, especially if any litigation is commenced, no longer holds
authoritative value in light of Digital Microwave Corporation v. Court of Appeals, 328 SCRA 286 (2000),
where it was held that the reason the certification against forum shopping is required to be

SUPREME COURT REPORTS ANNOTATED

BPI Leasing Corporation vs. Court of Appeals

accomplished by petitioner himself is that only he himself has actual knowledge of whether or not he
has initiated similar actions or proceedings in other courts or tribunals.—The argument of substantial
compliance deserves no merit, given the Court’s ruling in Mendigorin v. Cabantog: ...The CA held that
there was substantial compliance with the Rules of Court, citing Dimagiba vs. Montalvo, Jr. [202 SCRA
641] to the effect that a lawyer who assumes responsibility for a client’s cause has the duty to know the
entire history of the case, especially if any litigation is commenced. This view, however, no longer holds
authoritative value in the light of Digital Microwave Corporation vs. CA [328 SCRA 286], where it was
held that the reason the certification against forum shopping is required to be accomplished by
petitioner himself is that only the petitioner himself has actual knowledge of whether or not he has
initiated similar actions or proceedings in other courts or tribunals. Even counsel of record may be
unaware of such fact. To our mind, this view is more in accord with the intent and purpose of Revised
Circular No. 28-91.

Administrative Law; Taxation; Administrative issuances may be distinguished according to their nature
and substance—legislative and interpretative; Revenue Regulation 19-86 was issued pursuant to the
rule-making power of the Secretary of Finance, thus making it legislative, and not interpretative.—
Administrative issuances may be distinguished according to their nature and substance: legislative and
interpretative. A legislative rule is in the matter of subordinate legislation, designed to implement a
primary legislation by providing the details thereof. An interpretative rule, on the other hand, is
designed to provide guidelines to the law which the administrative agency is in charge of enforcing. The
Court finds the questioned revenue regulation to be legislative in nature. Section 1 of Revenue
Regulation 19-86 plainly states that it was promulgated pursuant to Section 277 of the NIRC. Section 277
(now Section 244) is an express grant of authority to the Secretary of Finance to promulgate all needful
rules and regulations for the effective enforcement of the provisions of the NIRC. In Paper Industries
Corporation of the Philippines v. Court of Appeals, the Court recognized that the application of Section
277 calls for none other than the exercise of quasi-legislative or rule-making authority. Verily, it cannot
be disputed that Revenue Regulation 19-86 was issued pursuant to the rule-making power of the
Secretary of Finance, thus making it legislative, and not interpretative as alleged by BLC.

Same; Same; The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v. Michel J. Lhuillier
Pawnshop, Inc., is that when an administrative rule goes beyond merely providing for the means that
can facilitate or render less cumbersome the implementation of the law and substantially increases the
burden of those governed, it behooves the agency to accord at least to those directly affected a chance
to be heard and, thereafter, to be duly informed, before the issuance is given the force and effect of

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BPI Leasing Corporation vs. Court of Appeals

law.—The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v. Michel J. Lhuillier Pawnshop,
Inc., is that when an administrative rule goes beyond merely providing for the means that can facilitate
or render less cumbersome the implementation of the law and substantially increases the burden of
those governed, it behooves the agency to accord at least to those directly affected a chance to be
heard and, thereafter, to be duly informed, before the issuance is given the force and effect of law. In
Lhuillier and Fortune Tobacco, the Court invalidated the revenue memoranda concerned because the
same increased the tax liabilities of the affected taxpayers without affording them due process. In this
case, Revenue Regulation 19-86 would be beneficial to the taxpayers as they are subjected to lesser
taxes. Petitioner, in fact, is invoking Revenue Regulation 19-86 as the very basis of its claim for refund. If
it were invalid, then petitioner all the more has no right to a refund.

Same; Same; Statutory Construction; The principle is well entrenched that statutes, including
administrative rules and regulations, operate prospectively only, unless the legislative intent to the
contrary is manifest by express terms or by necessary implication.—The principle is well entrenched that
statutes, including administrative rules and regulations, operate prospectively only, unless the legislative
intent to the contrary is manifest by express terms or by necessary implication. In the present case,
there is no indication that the revenue regulation may operate retroactively. Furthermore, there is an
express provision stating that it “shall take effect on January 1, 1987,” and that it “shall be applicable to
all leases written on or after the said date.” Being clear on its prospective application, it must be given
its literal meaning and applied without further interpretation. Thus, BLC is not in a position to invoke the
provisions of Revenue Regulation 19-86 for lease rentals it received prior to January 1, 1987.

Same; Same; Same; Tax refunds are in the nature of tax exemptions and are to be strictly construed
against the person or entity claiming the exemption.—It is also apt to add that tax refunds are in the
nature of tax exemptions. As such, these are regarded as in derogation of sovereign authority and are to
be strictly construed against the person or entity claiming the exemption. The burden of proof is upon
him who claims the exemption and he must be able to justify his claim by the clearest grant under
Constitutional or statutory law, and he cannot be permitted to rely upon vague implications. Nothing
that BLC has raised justifies a tax refund.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

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BPI Leasing Corporation vs. Court of Appeals

 Padilla Law Office for petitioner.

The Solicitor General for respondents.

AZCUNA, J.:

The present petition for review on certiorari assails the decision1Rollo, pp. 28-36. of the Court of
Appeals in CA-G.R. SP No. 38223 and its subsequent resolution2Id., pp. 37-38. denying the motion for
reconsideration. The assailed decision and resolution affirmed the decision of the Court of Tax Appeals
(CTA) which denied petitioner BPI Leasing Corporation’s (BLC) claim for tax refund in CTA Case No. 4252.

The facts are not disputed.

BCL is a corporation engaged in the business of leasing properties.3Id., p. 9. For the calendar year 1986,
BLC paid the Commissioner of Internal Revenue (CIR) a total of P1,139,041.49 representing 4%
“contractor’s percentage tax” then imposed by Section 205 of the National Internal Revenue Code
(NIRC), based on its gross rentals from equipment leasing for the said year amounting to
P27,783,725.42.4Id., pp. 89-96.

On November 10, 1986, the CIR issued Revenue Regulation 1986. Section 6.2 thereof provided that
finance and leasing companies registered under Republic Act 5980 shall be subject to gross receipt tax of
5%-3%-l% or actual income earned. This means that companies registered under Republic Act 5980,
such as BLC, are not liable for “contractor’s percentage tax” under Section 205 but are, instead, subject
to “gross receipts tax” under Section 260 (now Section 122) of the NIRC. Since BLC had earlier paid the
aforementioned “contractor’s percentage tax,” it re-computed its tax liabilities under the “gross receipts
tax” and arrived at the amount of P361,924.44.

On April 11, 1988, BLC filed a claim for a refund with the CIR for the amount of P777,117.05,
representing the difference between the P1,139,041.49 it had paid as “contractor’s percentage tax” and
P361,924.44 it should have paid for “gross receipts tax.”5Id., pp. 97-98. Four days
_______________

1 Rollo, pp. 28-36.

2 Id., pp. 37-38.

3 Id., p. 9.

4 Id., pp. 89-96.

5 Id., pp. 97-98.

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BPI Leasing Corporation vs. Court of Appeals

later, to stop the running of the prescriptive period for refunds, petitioner filed a petition for review
with the CTA.6Id., pp. 87-88.

In a decision dated May 13, 1994,7Id., pp. 47-57. the CTA dismissed the petition and denied BLC’s claim
of refund. The CTA held that Revenue Regulation 19-86, as amended, may only be applied prospectively
such that it only covers all leases written on or after January 1, 1987, as stated under Section 7 of said
revenue regulation:

Section 7. Effectivity.—These regulations shall take effect on January 1, 1987 and shall be applicable to
all leases written on or after the said date.

The CTA ruled that, since BLC’s rental income was all received prior to 1986, it follows that this was
derived from lease transactions prior to January 1, 1987, and hence, not covered by the revenue
regulation.

A motion for reconsideration of the CTA’s decision was filed, but was denied in a resolution dated July
26, 1995.8Id., pp. 70-78 & 46-57. BLC then appealed the case to the Court of Appeals, which issued the
aforementioned assailed decision and resolution.9Id., pp. 79-86. Hence, the present petition.

In seeking to reverse the denial of its claim for tax refund, BLC submits that the Court of Appeals and the
CTA erred in not ruling that Revenue Regulation 19-86 may be applied retroactively so as to allow BLC’s
claim for a refund of P777,117.05.

Respondents, on the other hand, maintain that the provision on the date of effectivity of Revenue
Regulation 19-86 is clear and unequivocal, leaving no room for interpretation on its prospective
application. In addition, respondents argue that the petition should be dismissed on the ground that the
Verification/Certification of Non-Forum Shopping was signed by the counsel of record and not by BLC,
through a duly authorized representative, in violation of Supreme Court Circular 28-91.

In a resolution dated March 29, 2000,10Id., p. 202. the petition was given due course and the Court
required the parties to file their respec-
_______________

6 Id., pp. 87-88.

7 Id., pp. 47-57.

8 Id., pp. 70-78 & 46-57.

9 Id., pp. 79-86.

10 Id., p. 202.

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BPI Leasing Corporation vs. Court of Appeals

 tive Memoranda. Upon submission of the Memoranda, the issues in this case were delineated, as
follows:11BLC’s Memorandum dated July 20, 2000, Rollo, p. 236.

WHETHER THE INSTANT PETITION FOR REVIEW ON CERTIORARI SUBSTANTIALLY COMPLIES WITH
SUPREME COURT CIRCULAR 28-91.

WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS LEGISLATIVE OR INTERPRETATIVE IN NATURE.

WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS PROSPECTIVE OR RETROACTIVE IN ITS

APPLICATION.

WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, FAILED TO MEET THE QUANTUM OF
EVIDENCE REQUIRED IN REFUND CASES.

WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, IS ESTOPPED FROM CLAIMING ITS
PRESENT REFUND.

As to the first issue, the Court agrees with respondents’ contention that the petition should be
dismissed outright for failure to comply with Supreme Court Circular 28-91, now incorporated as Section
2 of Rule 42 of the Rules of Court. The records plainly show, and this has not been denied by BLC, that
the certification was executed by counsel who has not been shown to have specific authority to sign the
same for BLC.

In BA Savings Bank v. Sia,12336 SCRA 484 (2000). it was held that the certificate of non-forum shopping
may be signed, for and on behalf of a corporation, by a specifically authorized lawyer who has personal
knowledge of the facts required to be disclosed in such document. This ruling, however, does not mean
that any lawyer, acting on behalf of the corporation he is representing, may routinely sign a certification
of non-forum shopping. The Court emphasizes that the lawyer must be “specifically authorized” in order
validly to sign the certification.
Corporations have no powers except those expressly conferred upon them by the Corporation Code and
those that are implied by or are incidental to its existence. These powers are exercised through their
board of directors and/or duly authorized officers and

_______________

11 BLC’s Memorandum dated July 20, 2000, Rollo, p. 236.

12 336 SCRA 484 (2000).

11

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BPI Leasing Corporation vs. Court of Appeals

agents. Hence, physical acts, like the signing of documents, can be performed only by natural persons
duly authorized for the purpose by corporate bylaws or by specific act of the board of directors.13Yao
Ka Sin Trading v. Court of Appeals, 209 SCRA 763 (1992).
The records are bereft of the authority of BLC’s counsel to institute the present petition and to sign the
certification of non- forum shopping. While said counsel may be the counsel of record for BLC, the
representation does not vest upon him the authority to execute the certification on behalf of his client.
There must be a resolution issued by the board of directors that specifically authorizes him to institute
the petition and execute the certification, for it is only then that his actions can be legally binding upon
BLC.

BLC however insists that there was substantial compliance with SC Circular No. 28-91 because the
verification/certification was issued by a counsel who had full personal knowledge that no other petition
or action has been filed or is pending before any other tribunal. According to BLC, said counsel’s law firm
has handled this case from the very beginning and could very well attest and/or certify to the absence of
an instituted or pending case involving the same or similar issues.

The argument of substantial compliance deserves no merit, given the Court’s ruling in Mendigorin v.
Cabantog:14G.R. No. 136449, August 22, 2002, 387 SCRA 655.

. . . The CA held that there was substantial compliance with the Rules of Court, citing Dimagiba vs.
Montalvo, Jr. [202 SCRA 641] to the effect that a lawyer who assumes responsibility for a client’s cause
has the duty to know the entire history of the case, especially if any litigation is commenced. This view,
however, no longer holds authoritative value in the light of Digital Microwave Corporation vs. CA [328
SCRA 286], where it was held that the reason the certification against forum shopping is required to be
accomplished by petitioner himself is that only the petitioner himself has actual knowledge of whether
or not he has initiated similar actions or proceedings in other courts or tribunals. Even counsel of record
may be unaware of such fact. To our mind, this view is more in accord with the intent and purpose of
Revised Circular No. 28-91.

Clearly, therefore, the present petition lacks the proper certification as strictly required by jurisprudence
and the Rules of Court.

_______________
13 Yao Ka Sin Trading v. Court of Appeals, 209 SCRA 763 (1992).

14 G.R. No. 136449, August 22, 2002, 387 SCRA 655.

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BPI Leasing Corporation vs. Court of Appeals

Even if the Court were to ignore the aforesaid procedural infirmity, a perusal of the arguments raised in
the petition indicates that a resolution on the merits would nevertheless yield the same outcome.

BLC attempts to convince the Court that Revenue Regulation 19-86 is legislative rather than
interpretative in character and hence, should retroact to the date of effectivity of the law it seeks to
interpret.

Administrative issuances may be distinguished according to their nature and substance: legislative and
interpretative. A legislative rule is in the matter of subordinate legislation, designed to implement a
primary legislation by providing the details thereof. An interpretative rule, on the other hand, is
designed to provide guidelines to the law which the administrative agency is in charge of
enforcing.15Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary, 238
SCRA 63 (1994).

The Court finds the questioned revenue regulation to be legislative in nature. Section 1 of Revenue
Regulation 19-86 plainly states that it was promulgated pursuant to Section 277 of the NIRC. Section 277
(now Section 244) is an express grant of authority to the Secretary of Finance to promulgate all needful
rules and regulations for the effective enforcement of the provisions of the NIRC. In Paper Industries
Corporation of the Philippines v. Court of Appeals,16250 SCRA 434 (1995). the Court recognized that the
application of Section 277 calls for none other than the exercise of quasi-legislative or rule-making
authority. Verily, it cannot be disputed that Revenue Regulation 19-86 was issued pursuant to the rule-
making power of the Secretary of Finance, thus making it legislative, and not interpretative as alleged by
BLC.

BLC further posits that, assuming the revenue regulation is legislative in nature, it is invalid for want of
due process as no prior notice, publication and public hearing attended the issuance thereof. To support
its view, BLC cited CIR v. Fortune Tobacco, et al.,17261 SCRA 236 (1996). wherein the Court nullified a
revenue memorandum circular which reclassified certain cigarettes and subjected them to a

_______________

15 Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary, 238 SCRA 63
(1994).

16 250 SCRA 434 (1995).

17 261 SCRA 236 (1996).

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BPI Leasing Corporation vs. Court of Appeals

higher tax rate, holding it invalid for lack of notice, publication and public hearing.

The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v. Michel J. Lhuillier Pawnshop,
Inc.,18G.R. No. 150947, July 15, 2003, 406 SCRA 178. is that when an administrative rule goes beyond
merely providing for the means that can facilitate or render less cumbersome the implementation of the
law and substantially increases the burden of those governed, it behooves the agency to accord at least
to those directly affected a chance to be heard and, thereafter, to be duly informed, before the issuance
is given the force and effect of law. In Lhuillier and Fortune Tobacco, the Court invalidated the revenue
memoranda concerned because the same increased the tax liabilities of the affected taxpayers without
affording them due process. In this case, Revenue Regulation 19-86 would be beneficial to the taxpayers
as they are subjected to lesser taxes. Petitioner, in fact, is invoking Revenue Regulation 19-86 as the very
basis of its claim for refund. If it were invalid, then petitioner all the more has no right to a refund.

After upholding the validity of Revenue Regulation 19-86, the Court now resolves whether its
application should be prospective or retroactive.

The principle is well entrenched that statutes, including administrative rules and regulations, operate
prospectively only, unless the legislative intent to the contrary is manifest by express terms or by
necessary implication.19Republic v. Sandiganbayan, 269 SCRA 316 (1997), citing Lee v. Rodil, 175 SCRA
100 (1989) and State Prosecutors v. Muro, 236 SCRA 505 (1994); Al-Amanah Islamic Investment Bank of
the Philippines v. Civil Service Commission, 207 SCRA 801 (1992). In the present case, there is no
indication that the revenue regulation may operate retroactively. Furthermore, there is an express
provision stating that it “shall take effect on January 1, 1987,” and that it “shall be applicable to all
leases written on or after the said date.” Being clear on its prospective application, it must be given its
literal meaning and applied without further interpretation.20Bustamante v. National Labor Relations
Commission, 265 SCRA 61 (1996). Thus, BLC is not in a position to invoke the provisions of Revenue
Regulation 19-86 for lease rentals it received prior to January 1, 1987.

_______________

18 G.R. No. 150947, July 15, 2003, 406 SCRA 178.

19 Republic v. Sandiganbayan, 269 SCRA 316 (1997), citing Lee v. Rodil, 175 SCRA 100 (1989) and State
Prosecutors v. Muro, 236 SCRA 505 (1994); Al-Amanah Islamic Investment Bank of the Philippines v. Civil
Service Commission, 207 SCRA 801 (1992).

20 Bustamante v. National Labor Relations Commission, 265 SCRA 61 (1996).

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BPI Leasing Corporation vs. Court of Appeals

It is also apt to add that tax refunds are in the nature of tax exemptions. As such, these are regarded as
in derogation of sovereign authority and are to be strictly construed against the person or entity
claiming the exemption. The burden of proof is upon him who claims the exemption and he must be
able to justify his claim by the clearest grant under Constitutional or statutory law, and he cannot be
permitted to rely upon vague implications.21Commissioner of Internal Revenue v. Procter & Gamble
Philippine Manufacturing Corp., 204 SCRA 377 (1991). Nothing that BLC has raised justifies a tax refund.

It is not necessary to rule on the remaining issues.

WHEREFORE, the petition for review is hereby DENIED, and the assailed decision and resolution of the
Court of Appeals are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Davide, Jr., (C.J., Chairman), Panganiban, Ynares-Santiago and Carpio, JJ., concur.

Petition denied, judgment and resolution affirmed.

Notes.—An election protestant’s belief that he no longer had a pending case before the COMELEC
because he deemed it abandoned upon filing of his protest is not a valid reason for non-disclosure of the
pendency of said pre-proclamation case. (Soller vs. Commission on Elections, 339 SCRA 685 [2000])
The most important factor in determining the existence of forum shopping is the “vexation caused the
courts and parties-litigants by a party who asks different courts to rule on the same or related causes or
grant the same or substantially the same reliefs.” (Roxas vs. Court of Appeals, 363 SCRA 207 [2001])

——o0o——

_______________

21 Commissioner of Internal Revenue v. Procter & Gamble Philippine Manufacturing Corp., 204 SCRA
377 (1991). BPI Leasing Corporation vs. Court of Appeals, 416 SCRA 4, G.R. No. 127624 November 18,
2003